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Preserving Safe, High Quality Public Housing Should Be a Priority of Federal Housing Policy

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This report, based on significant new research, examines the state of public housing in the United States today and discusses federal policy changes that have greatly improved public housing over the past decade, as well as the deteriorating funding situation that is undermining this progress. It then outlines several policy recommendations that could further strengthen public housing and preserve most developments for the future.

Executive Summary

Located in more than 3,500 communities across the country, public housing is a vital national resource that assists 2.3 million vulnerable Americans. Nearly two-thirds of all public housing households include an elderly person or an individual with a disability; without housing assistance, many could be forced to move to an institution. As the U.S. population continues to age in coming years, affordable housing that is suitable for seniors will become even more important. In addition, public housing provides crucial stability for more than 400,000 low-income families with children, the majority of them working families.

The public housing stock — and the people who live in it — have changed in significant ways over the past decade. For example:

Center research finds that most of the projects that generated negative stereotypes of public housing in the past have been transformed or demolished. Since 1995, about 200,000 public housing units, including the great majority of large “high rises,” have been torn down. Today, only 48,000 units are in family projects with more than 500 units (this figure omits New York City, where high-rise housing makes up an unusually large share of the housing stock occupied by families at all income levels).

Center research also finds that a much smaller share of public housing units are located in very poor neighborhoods and a larger share of families living in public housing are working. Over the last decade, the share of family units in neighborhoods where at least two in every five residents are poor has fallen by 40 percent. In fact, only 86,000 general-occupancy units — less than 11 percent of all public housing in the nation outside New York City — are in large projects in high-poverty neighborhoods. Similarly, since 1997 the share of public housing families with children that rely on welfare as their primary source of income has declined from 35 percent to 19 percent, and a larger share of families are working.

The vast majority of public housing developments are now in good physical condition. Ninety percent of developments meet or exceed housing quality standards, although most developments are more than 30 years old, and many will need rehabilitation to continue to provide decent quality homes.

Sound changes in federal policy contributed to all of these gains. But in the past several years the federal government has failed to provide the state and local housing agencies that own and operate public housing with sufficient funds to maintain the units and make needed capital improvements. The federal government has significantly underfunded agencies’ operating subsidies for six consecutive years. In addition, agencies’ annual funding for capital expenses such as renovation and replacing aging appliances and systems is too low to meet the new needs that accumulate each year, let alone address the estimated $22 billion backlog they face in unmet needs. (Some units may require replacement rather than renovation. If 100,000 of the nearly 1.2 million units are demolished and replaced, the cost of bringing public housing up-to-date would be about $32 billion.)

These large and persistent funding shortfalls threaten to undermine public housing’s recent progress and also have contributed to the loss of thousands of public housing units, forced harmful cuts in security and other services, and delayed needed repairs.

Some policymakers and housing experts favor replacing public housing with vouchers that families would use to help pay the cost of renting housing in the private market. The voucher program is a highly successful form of housing assistance, and vouchers can expand the housing choices available to needy families. But indiscriminately driving housing agencies to replace public housing units with vouchers would be unwise, for several reasons.

Public housing serves certain demographic groups better than vouchers can. As noted, most households in public housing include an elderly person or an individual with a disability, two groups that often have difficulty finding units to rent with vouchers. Many public housing developments, in contrast, are configured to accommodate residents’ mobility impairments and other needs.

Public housing serves certain geographic areas better than vouchers can, such as those where the stock of moderately priced rental housing is limited. Nearly a third of family units are in lower poverty areas where vouchers may be difficult to use and construction of new affordable housing would likely face local hurdles.

Shifting to vouchers could actually cost the federal government more than providing sustainable funding to maintain public housing developments. This is because the federal government and local agencies have already made large investments in many of these developments. We estimate that on average rehabilitating currently available public housing units and funding their continuing operation for 30 years would cost eight percent less than replacing the units with vouchers. Federal costs would almost certainly be even greater, because agencies would be most likely to shift to vouchers in cases where the voucher subsidies they would receive are relatively large.

Accordingly, the federal government should adopt a comprehensive plan for public housing that includes four elements:

The federal government should reverse its recent policy of underfunding public housing’s operating costs and provide housing agencies with the full amount of funding they need for adequate upkeep and operation of developments.

The federal government should provide added resources to rehabilitate developments and establish a new process to allocate those resources efficiently. Direct grants should play a key role in modernizing public housing, but the federal government should also create new tools to help agencies leverage loans and other private investment.

Housing agencies should be permitted to replace certain developments with “project-based” vouchers, which make specific units in privately or publicly owned housing developments affordable to low-income families. This strategy should be targeted at family developments in areas with high poverty rates and other problems and those with unusually high capital needs. Replacing public housing funding with vouchers could make it easier for agencies to borrow the capital funds needed for repairs and to reduce the concentration of poor families.

While most of the large family developments in low-opportunity neighborhoods have been eliminated, some remain. Housing agencies should be required to transform large, low-opportunity developments into mixed-income developments or to provide vouchers enabling residents to move to better housing. (Mixed income developments would include residents who do not receive housing assistance.)

Table of Contents

Public Housing Meets Critical Needs

Public Housing Has Improved Dramatically in Past 15 Years

Funding Shortfalls Undermine Recent Progress

Replacing Public Housing with Tenant-Based Vouchers is Often Unwise

Policy Recommendations to Preserve and to Replace Public Housing 21 Conclusion and Endnotes